International trade on the basis of comparative advantage maximizes world output and allows consumers to access better-quality products at lower prices than would be available in the domestic market alone

Suppose the demand for pizza in a small isolated town is p = 10 - Q. The only two firms, A and B, behave as Cournot duopolists. Each has a cost function TC = 2 + Q

If the government wants to subsidize firm A to raise its output to that of a Stackelberg leader, how large should the subsidy be?

A decrease in aggregate demand causes a decrease in ________ only in the short run, but causes a decrease in ________ in both the short run and the long run

A) the price level; real GDP B) real GDP; real GDP C) the price level; the price level D) real GDP; the price level